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Small and medium-sized businesses could be throwing away the price of a top-of the line Porsche Panamera every year. Maybe you wouldn’t buy a Porsche or other luxury sedan with it – but what could your business do with an extra $146,448 a year? New data released by Concur found small and medium-sized businesses (SMBs) average as much as $12,000 a month on duplicate vendor invoice payments. That adds up fast.
This is a sizeable data set
Concur processed nearly $20 billion across more than 2.8 million invoices on behalf of SMB customers between September 2015 and August 2016. Based on customers that processed invoices only in the amounts of $50,000 and less, the typical SMB (a business that employs up to 1,000 people) processed an average of 450 invoices in the busiest month (July), and experienced an invoice duplication rate of 1.29 percent. That works out to about six duplicate invoices a month, or a bit over one a week. The average value of a duplicate invoice was $2,034. So: 2,034 x 6 = $12,204/month leakage. Multiply by 12 to capture the whole year, and if you could catch all those duplicates – there’s your Porsche.
Some months are bigger still
As we noted above, July is the peak of the year in terms of invoices processed. In July 2016, across the total population of SMB customers studied, the data shows the largest number of duplicate invoices. The median value was $530, but the average value in July was $9,066 per invoice.
How can you plug the leaks?
Duplicate invoices often happen because organizations are processing invoices manually – and manual processes eventually lead to data entry errors – somebody enters the number twice on a spreadsheet. Let that happen six times in a month, and suddenly, you’re out a significant amount of money. But for businesses that automate their AP processes, the data goes directly into the system. Besides serving as a platform for managing invoicing and payments, automation can allow for tracking and matching invoice details to identify duplication. For example, for SMB customers that processed invoices only in the amounts of $50,000 and less from September 2015 through August 2016, Concur prevented the payment of nearly $24 million in duplicate invoices.
Add it all up
Besides eliminating duplicate payments, automating accounts payable can boost your bottom line in other ways. Invoice management software can include pre-defined reports and dashboards that allow you to track all of your spending and deliver in-depth insight so you can:
- Time payments more effectively to maximize your cash flow
- Pinpoint problem periods, for example, configure alerts or automatically halt processing when a duplicate invoice is detected, so you can more effectively manage your company’s cash position
- Even negotiate better deals with vendors
And that saves businesses not only a lot of financial headaches, but a bundle of operating dollars.
Christal Bemont, SVP & GM of the Small, Midsized and Nationals business unit at Concur.